Hallucinations are generally pretty normal, as it happens to people when they're between the stages of wake and sleep. Medications, alcohol, insomnia, stress, etc. can cause them.
Hallucinations do not usually occur during sleep, but usually from a lack of sleep. If you are imagining things while sleeping, you are most likely just dreaming. Try keeping a log of your dreams each night.
Sleep hallucinations can be caused by many things, one of the most popular being drug or alcohol use. It can also be an effect of other underlying mental problems or sleep disorders (like insomnia). Depending on your past history, you may want to see a sleep or mental specialist.
Medical term of Hallucinations during sleep is parasomia. it may simillar to nightmare. It involves the undesired events that comes during you sleep. Its also involve your sense and sound.